Nikkei set to fall for 3rd straight day as yen rebounds

Tue Jan 8, 2013 6:12pm EST

TOKYO, Jan 9 (Reuters) - Japan's Nikkei average is expected
to open lower on Wednesday and head for a third straight session
of losses, hurt by a rebounding yen as investors took profit on
the dollar after its recent gains against the Japanese currency.
  
    The Nikkei is likely to trade between 10,350 and
10,500, strategists said. Nikkei futures in Chicago 
closed at 10,425 on Tuesday, down 0.5 percent from the Osaka
 close of 10,480.
    "Today's Nikkei will still be in a correction period," said
Takashi Hiroki, chief strategist at Monex Inc.
    The yen was up 0.1 percent at 86.90 to the dollar on
Wednesday after strengthening 0.9 percent in the previous
session, its second straight day of gains. 
    The Nikkei has rallied more than 21 percent over the past
two months, spurred by yen weakness after Shinzo Abe, who became
Japan's prime minister late last month, called on the central
bank to adopt aggressive policy to energise the ailing economy,
including setting an inflation target of 2 percent.
    The rally has pushed up valuations of Japanese equities,
which carry a 12-month forward price-to-earnings ratio of 13,
versus 12.7 for the U.S. S&P 500 and 11.5 for the
pan-European STOXX Europe 600.
    However, Hiroki said any sell-off was likely to be limited
as investors may bet on a stronger Wall Street performance on
Wednesday after Alcoa Inc, the largest aluminum producer
in the United States, reported an in-line fourth-quarter profit
after the market close. Alcoa shares rose in after-hours
trading.
    On Tuesday, the Nikkei shed 0.9 percent to 10,508.06,
finding support at its five-day moving average at 10,502.67. The
broader Topix index lost 1 percent to 871.88.
        
> Wall St slips as earnings season gets under way           
> Euro, dollar fall vs yen as BOJ, ECB eyed                
> Treasuries gain as higher yields reel in buyers          
> Gold up for first time in 3 days on Asian buying        
> Brent crude up as annual rebalancing widens WTI spread   
    
    STOCKS TO WATCH
    --PANASONIC CORP 
    Panasonic, in a display of technological one-upmanship with
its South Korean rivals, unveiled a prototype of the world's
largest OLED screen on Tuesday. 
    --SEVEN & I HOLDINGS CO 
    Seven & I's quarterly operating profit rose 4.8 percent as
higher profits from its core 7-Eleven stores were supported by
stronger income figures at other retail formats, leading the
Japanese firm to maintain its record annual outlook.
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